Increases in New Zealand's paid parental leave


Is New Zealand finally catching up to other OECD countries in the paid parental leave stakes? In this article Peter van Keulen looks at the current paid parental leave entitlement and the possibility surrounding an increase to six months if Sue Moroney's Members' Bill is passed.

Under the Parental Leave and Employment Protection Act 1987, parents eligible for the scheme are entitled to up to 14 weeks paid leave at a rate calculated on the basis of their average weekly earnings. The maximum rate is adjusted every year to account for any increase in average weekly earnings.

From 1 July 2014 parental leave payments increased by 3.3%. The maximum payment for eligible employees and self-employed persons is now $504.10 gross per week. The minimum parental leave payment for self-employed people increased to $142.50 gross per week.

In May 2014 the Government announced an overhaul of leave as part of its budget. This will see parental leave increase to 16 weeks form 1 April 2015 and then 18 weeks from 1 April 2016.

In addition to these measures there is currently a Bill to extend paid parental leave awaiting its third reading in parliament. Sue Moroney's Members’ Bill, titled the Parental Leave and Employment Protection (Six Months’ Paid Leave) Amendment Bill, will extend paid parental leave to six months. It appears that the Bill has enough support to be passed but the Government may use its power to veto it. Given the position put forward in the Government’s budget earlier this year that seems likely but watch this space. 

For now we know the increases that will occur but there may be more on the horizon.  A particular concern the Bill raises for employers is having employees away from work for a longer period of time.  The concern if the six months is implemented is not the cost for the employer but the implications on the day to day management at work.  Six months is a significant period to time to cover as opposed to the current 14 weeks (or even 18 weeks in 2016) and it may also lead to a greater increase of parents not returning to work.

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